Steel and iron deals proliferate
Some recent acquisitions in the steel industry illustrate two trends we have been writing about. First is the global reaction of the still pretty competitive steel industry in the light of the consolidation of the iron mining industry. Second, at least in one case, the increasing interest in US steel producers by cash-rich foreign companies and discount prices caused by the dollar's fall. So much so that foreign companies are selling each other North American assets.
That second point is illustrated in the announcement of Luxemburg-headquarter/Russian-grounded (it is the #1 steel company there) Evraz Group that it would buy the U.S. tube business and Canadian plate and pipe business and Ipsco. Ipsco is a division of Sweden-based Svenskt Staal AB (SSAB), which bought Ipsco in 2007 for $7.7 billion. SSAB will retain other steelmaking assets of Ipsco, over half of the old Ipsco. Both companies will get to use the Ipsco brand.
The deal is for a little over $4 billion. As part of the SSAB deal, Evraz agreed to sell some of the Ipsco assets to OAO TMK, a Russia-based steelmaker specializing in oil and gas pipes, for $1.7 billion.
In 2006 Evraz bought Oregon Steel, also a steel tube maker, for #2.3 billion. In 2007, Evraz bought Delaware-based Claymont Steel for $564 million.
Meanwhile, there are a number of smaller deals, China's Sinosteel launched a hostile, all-cash offer to buy Australian iron ore prospector Midwest for $1.1 billion. Russia's Magnitogorsk Iron & Steel Works has bid to buy a controlling stake in Iran's Esfahan Steel. Japan's Maruichi Steel Tube announced bought a controlling stake of US-based Leavitt Tube Company. US-based Gerdau Ameristeel said its Pacific Coast Steel (PCS) joint venture would acquire US-based Century Steel.
To top it all off, it is rumored that Brazil-based Vale, the world's biggest iron-ore producer, is close to a deal to acquire Swiss-based mining giant Xstrata for around $90 billion.
